BROWSE

Obligor

What is an 'Obligor'

An obligor, also known as a debtor, is a person or entity who is legally or contractually obliged to provide a benefit or payment to another. In a financial context, the term "obligor" refers to a bond issuer who is contractually bound to make all principal repayments and interest payments on outstanding debt. The recipient of the benefit or payment is known as the obligee.

Explaining 'Obligor'

An obligor is a person who is legally bound to another. Debt holders are the most common types of obligors. However, in addition to the required repayment of interest and principal, many holders of corporate debt are also contractually required to meet other requirements. For a bond holder, these are called covenants and are outlined in the initial bond issue between the obligor and obligee.

Obligor in a Corporate Setting

Covenants can be either affirmative or negative. An affirmative covenant is something that the obligor is required to do, such as the need to hit specific performance benchmarks. A negative covenant is restrictive in that it stops the obligor from doing something, such as restructuring the leadership of the organization. If a covenant is breached by an obligor, the bond may become invalid and require immediate repayment, or it can sometimes be converted to equity ownership.

Obligor in a Personal Setting

An obligor is not required to be a bond holder or a holder of some other form of debt. Someone can become an obligor in his personal life, too. In family law, there are certain cases when a court order is handed down – in a divorce settlement, for example – that requires one of the parents to pay child support to the other parent. If a working spouse is told by the courts to pay the non-working spouse $500 a month, the monthly payment would make him an obligor. In situations like this, if the there are changes to an obligor's financial status or income, he may petition the court to reduce his monthly obligation.


Further Reading


The economic role of jumps and recovery rates in the market for corporate default risk
www.jstor.org [PDF]
… wu.ac.at, Institute for Finance, Banking and Insurance, Vienna University of Economics and Business … for the default intensity of the latent Cox process governing default and survival of an obligor … facts about CDS premia from our cross section of US corporate obligors, which we …

Economic benefit of powerful credit scoringEconomic benefit of powerful credit scoring
www.sciencedirect.com [PDF]
… wu.ac.at, Institute for Finance, Banking and Insurance, Vienna University of Economics and Business … for the default intensity of the latent Cox process governing default and survival of an obligor … facts about CDS premia from our cross section of US corporate obligors, which we …

Credit Ratings Migration: Quantifying Obligor RiskCredit Ratings Migration: Quantifying Obligor Risk
papers.ssrn.com [PDF]
… wu.ac.at, Institute for Finance, Banking and Insurance, Vienna University of Economics and Business … for the default intensity of the latent Cox process governing default and survival of an obligor … facts about CDS premia from our cross section of US corporate obligors, which we …

Credit risk and the instability of the financial system: An ensemble approachCredit risk and the instability of the financial system: An ensemble approach
iopscience.iop.org [PDF]
… wu.ac.at, Institute for Finance, Banking and Insurance, Vienna University of Economics and Business … for the default intensity of the latent Cox process governing default and survival of an obligor … facts about CDS premia from our cross section of US corporate obligors, which we …

Civil Contempt and the Indigent Child Support Obligor: The Silent Return of Debtor's PrisonCivil Contempt and the Indigent Child Support Obligor: The Silent Return of Debtor's Prison
heinonline.org [PDF]
… wu.ac.at, Institute for Finance, Banking and Insurance, Vienna University of Economics and Business … for the default intensity of the latent Cox process governing default and survival of an obligor … facts about CDS premia from our cross section of US corporate obligors, which we …

Application of Analytic Hierarchy Process to Develop Credit Scoring Models for Financial Institution Obligors in Vietnam Commercial BanksApplication of Analytic Hierarchy Process to Develop Credit Scoring Models for Financial Institution Obligors in Vietnam Commercial Banks
papers.ssrn.com [PDF]
… wu.ac.at, Institute for Finance, Banking and Insurance, Vienna University of Economics and Business … for the default intensity of the latent Cox process governing default and survival of an obligor … facts about CDS premia from our cross section of US corporate obligors, which we …


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